MercoPress. South Atlantic News Agency

Brazil promises to support US dollar and exporters.

The Brazilian government worried with a weak dollar and its impact on exports announced its decision to counter the appreciation of the local currency.

"It's a good option to bet on an improvement of the current exchange rate during 2005 since this is the only way we can consolidate the ground conquered in overseas markets", said Development, Industry and Foreign Trade Minister Luiz Fernando Furlan. Actually a strong local currency, Real, makes Brazilian products more dear overseas, increases production costs in US dollars and hinders Brazilian exports competitiveness.

Minister Furlan made the announcement during the opening of one of the world's most important footwear and leather international fair in Sao Paulo.

In 2004 Brazil totalled record exports of 94 billion US dollars taking advantage of the world economy recovery, the sustained depreciation of the Real since the mid nineties and the conquest of new markets with an aggressive export policy.

Export growth in 2004 was 30% above 2003, but is expected to be more moderate this year, possibly 12%, recovers said Mr. Furlan has said.

An expected growth in imports, as the domestic market recovers, will also tend to even out the supply of US dollars in money markets.

After several weeks of a "hands off" policy which promoted a strong appreciation of the Real, the Brazilian Central Bank began operating in the local exchange market with US dollars purchase operations designed to strengthen the country's international reserves and take advantage of a weak dollar.

But despite the Central Bank's intervention, the US dollar continued to slide against the Brazilian currency and this week was trading in the range of 2,70 Reales per greenback after months of having stabilized at 2,95 Reales. When the current "Socialist" administration of President Lula da Silva took office the US dollar soared to 4 Reales.

Mr. Furlan a successful agri-businessman has repeatedly insisted that an "ideal" exchange rate for exporters would be in the range of 3 Reales per US dollar.